Problem 13-26 Systematic versus Unsystematic Risk [LO3] Consider the following Information about Stocks I and II: Rate of Return if State Occurs State of Economy Recession Probability of State of- Economy Stock I Stock II 20 04 .35 Normal .60 26 .15 Irrational exuberance 20 10 .55 The market risk premium is 5 percent, and the risk-free rate is 4 percent. (Do not round Intermediate calculations. Enter your standard deviation answers as rounded to 2 decimal places, e.g., 32.16. Round your beta answers to 2 decimal a percent places, e.g., 32.16.) The standard deviation on Stock I's return is deviation on Stock Il's return is stock's systematic risk/beta, Stock percent, and the Stock I beta is The standard percent, and the Stock II beta is Therefore, based on the is "riskier"
Problem 13-26 Systematic versus Unsystematic Risk [LO3] Consider the following Information about Stocks I and II: Rate of Return if State Occurs State of Economy Recession Probability of State of- Economy Stock I Stock II 20 04 .35 Normal .60 26 .15 Irrational exuberance 20 10 .55 The market risk premium is 5 percent, and the risk-free rate is 4 percent. (Do not round Intermediate calculations. Enter your standard deviation answers as rounded to 2 decimal places, e.g., 32.16. Round your beta answers to 2 decimal a percent places, e.g., 32.16.) The standard deviation on Stock I's return is deviation on Stock Il's return is stock's systematic risk/beta, Stock percent, and the Stock I beta is The standard percent, and the Stock II beta is Therefore, based on the is "riskier"
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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